Construction Workers

This webpage is based on a profile of construction workers commissioned by the WIEGO Network for the Bill & Melinda Gates Foundation and prepared by Dave Spooner and Annie Hopley in 2011.

Construction provides much needed work opportunities for some of the poorest and most marginalized sections of society in developing countries.

Construction output, by value, is heavily concentrated in the developed world. The high income countries of Europe are responsible for 30 per cent of global output, the United States for 21 per cent and Japan for 20 per cent. The figure for India, is only 1.7 per cent; for China, despite its huge size and rapid economic growth in recent years, is only 6 per cent (ILO 2007[1]).

While three-quarters of output is in the developed countries, three-quarters of employment is in the developing world. Many construction workers in these countries are informally employed and not counted in official data, so the real number is likely much higher.

Technology is the reason for this disparity. According to the International Labour Organization (ILO), in richer countries where labour is expensive, machines have largely replaced workers in many new construction tasks (although repair and maintenance is still very labour intensive). In developing countries, where labour is cheap, most tasks are still done by manual methods with minimal use of machinery and equipment
(ILO 2007[1]).

A Major Source of Employment

The construction industry is a major source of employment worldwide, arguably the second largest after agriculture, and generally the primary one in urban areas. Building construction (both new build and maintenance) are labour-intensive activities, generating many jobs per unit of investment both on and off the building site.

The construction industry makes a major positive contribution to the economy of all countries. The output of the industry worldwide is estimated at around $3,000 billion per annum. The industry creates employment for more than 110 million people worldwide. The provision of large numbers of jobs at relatively low investment cost per job invested is particularly important in the developing countries, where the construction industry plays a major role in combating the high levels of unemployment and in absorbing surplus labour from the rural areas.

(ILO 2001b: p. 25)

Occupations and Status of Informal Construction Workers

Occupations within the informal construction industry range from unskilled labourers to highly-skilled craft workers. Typically, they form a hierarchy, with gang leaders having the highest status. There is evidence to suggest that women informal construction workers are concentrated almost exclusively at the bottom of the hierarchy (see below).

Building and Wood Workers’ International (BWI)1 estimates there are up to 180 million construction workers worldwide, with 75 per cent in developing countries. It argues that construction (BWI 2006[2]):

gives much needed employment for many of the world’s poorest and most vulnerable people

provides work for low-skilled or entry-level workers

is of special importance for the landless poor

employs large numbers of rural-to-urban migrants

Informal Workers as a Proportion of All Construction Workers

"Informality is now the norm, rather than the exception, in the construction industry throughout much of the developing world” (Wells 2007).[3]

In India, the share of casual labour in the construction workforce increased by 10 per cent between 1983 and 1993. In 1993, 64 per cent of men and 96 per cent of women in urban construction were working on a casual basis. If all self-employed workers were included, 89 per cent of men and 97 per cent of women in construction in 1993 could be considered as “informal labor” (Pais 2002[4]).

There is strong evidence that the number of informal workers as a proportion of all construction workers is growing. Studies in India, for example, show that while construction employment in the organized (formal) sector rose by 0.37 per cent between 1973 and 1987, the numbers of informal workers rose by 9.73 per cent (Wells 2007[3]).

The proportion of temporary construction workers in China rose from 28 per cent in 1980 to 65 per cent in 1999, and in Brazil the proportion of informal construction workers rose from 57 per cent in 1981 to 75 per cent in 1999 (ILO 2001a[6]).

Women Workers in Construction
According to the ILO, construction jobs in most countries are undertaken almost exclusively by men. However, in the countries of South Asia women often perform important but unskilled tasks for low pay. In India it is estimated that up to 30 per cent of construction workers are women. They are integrated into the bottom end of the industry, as unskilled workers or head-load carriers.

Access to training is usually not available. Discrimination in pay is widespread. A survey of 2,600 construction workers in five Indian cities found open inequality in pay with women earning 10-20 per cent less than men for similar work. Moreover, women are often employed as part of a family work unit, as the piece-rate system encourages workers to engage their wives and children to increase output, and in these circumstances women may work but may not (directly) receive any payment at all.

In the survey noted above, no female workers were on the payroll of any contractor, although they comprised from 23 per cent (Hyderabad, Delhi) to 34 per cent (Mumbai, Pune) of the construction workforce. No site had separate rest areas for women or nurseries for children and no women had received maternity benefit payments (ILO 2001a: p.13[7]).

An ILO study of informal construction workers in Nepal (Jha 2002[10]) found that the contribution of female labourers in the industry is significant. The government labour force survey of 1998 found that there were 52,000 female construction workers and 292,000 males. But the ILO study provided evidence that this was certainly an underestimation of the number of women in the sector. In the Far Western hills of Nepal, for example, a large majority of unskilled labourers are female. Women were found in large numbers at most of the construction sites and pick up points visited by the study team. They constituted 25 to 40 per cent of the roof casting groups and an estimated 75 per cent of the stone crushers. The latter also included many female child labourers as well as elderly people.

One other specialized job where the presence of women workers is significant is “marble polishing.” In all cases female construction workers receive lower wage rates than their male counterparts. Also, while men may be gradually promoted to higher skill categories, women continue working in menial tasks throughout their active lives.

Data Constraints and Gaps
In common with many other sectors of the informal economy, there are little reliable data. Good quality data on earnings is particularly sparse, presumably because of the short-term, unrecorded and scattered nature of the work. Much of the available data has been produced or commissioned by the ILO, particularly prior to and after the Tripartite Meeting on the Construction Industry in the Twenty-First Century: Its Image, Employment Prospects and Skill Requirements, held in Geneva in 2001. The other major data source is the work of Jill Wells and colleagues.2

In many developing countries, many workers are informal or work in small companies. There is a widespread use of the contracting system. Workers are employed on a project basis, with no insurance against periods of unemployment or sickness, insecurity of employment and lack of social protection. In addition, the industry exploits many migrant workers from less developed countries. Most often illegal, their wages and conditions of work are far from decent (BWI 2011[12]).

Earnings
Earnings are low and irregular. Inevitably, there is very little reliable data on earnings in the informal construction industry, particularly for those workers at the lower end of the labour hierarchy (including women workers).

The ILO review of the construction industry in 2001 concluded that in many developing countries, where the supply of labour (particularly unskilled labour) is far in excess of the number of jobs, earnings for the majority of construction workers are around the level of the minimum wage or below.

In Brazil, 35 per cent of unregistered construction workers (who form the bulk of the workforce) earned less than one minimum wage in 1999 and 70 per cent earned less than two such wages. It is generally assumed that a family of four would require two minimum wages just to survive. Hence 70 per cent of unregistered construction workers do not earn enough to support even a small family.

While it is sometimes suggested that employers may offer workers better wages in exchange for not registering work permits, it might be supposed that these wages will be eroded over time as non-registration becomes the norm.

Raising wages through increased productivity suffers from a similar problem. ILO research in São Paulo revealed that when higher productivity was increased and was highergeneralized across the industry, piece-work rates fell and left, leaving workers no better off. It was also found that in slack periods, skilled workers take unskilled jobs, putting downward pressure on the wages of the unskilled.

In China, wages for construction workers vary according to location. In 2001, in Beijing wages were around 20 yuan (US $2.42) for an unskilled worker and 25 yuan (US $3.02) for a skilled worker per eight hour day. Labourers from rural areas were paid around 7,000 yuan (US $846) per annum to work a ten hour day, which was just sufficient to provide for food for themselves in the city and to send money home to provide for their families in rural areas. However, the workers sometimes received less than they should from their employers (the state enterprises that control recruitment) and were paid only at the end of the year. This was partly so that the employers could gain interest on the wages and partly as a means of keeping the labourers under their control (ILO 2001a, p.33[6]).

Figures from Nepal indicate that construction labourers earn substantially less than the minimum wage, per Table 3.

The other major problem is the irregularity of income: most informal construction workers are on short-term contracts (although rarely in writing) or hired as day-labour. In India, as SEWA[8] explains:

There is no continuity or regularity of livelihood for construction workers. Every morning, they gather at select points / junctions known as Kadianaka to secure work from contractors in search of construction workers. However there is no certainty of securing work on a daily basis. Many times they can only work for 10-15 days each month.

In Nepal, according to the ILO study of informal construction workers, “the main aspiration of almost all workers is to have continuous work.” This means that those associated with Naikeas (gang-masters/small contractors) are prepared to accept 10-15 per cent lower pay than the day-labourers who congregate at pick-up points around the cities and towns to seek work for the day, because their work is more regular (Jha: 2002, p.40[10]).

Working Hours
In many countries, piece-work is the predominant wage form for temporary workers in the construction industry. Many are forced to work long hours, while others choose to do so, either because the rates of pay are so low or simply because they want to earn as much as possible while work is available. This is particularly the case of workers who have migrated from the countryside or from overseas, as is common in many developing countries (Brazil, China, India, Malaysia). A 10 to 12-hour day, for six days per week, is the norm (ILO 2001a: 33[6]).

Health and Safety
The link between growing informality of work and deteriorating conditions of occupational health and safety in the construction industry is difficult to prove statistically.There is evidence that industrial health and safety conditions for informal construction workers are extremely bad.

According to the ILO, accidents on construction sites in Malaysia are so common that everyone has come to accept them as an unavoidable feature of the industry. This is attributed to the casual terms of employment, the engagement of illegal foreign workers and the non-coverage of workers under the national insurance scheme. In the Philippines, unions monitored 24 construction accidents resulting in 32 fatalities in 1997 and 40 fatalities in 1998. They found that lack of formal training is a factor in the poor safety record of the industry, with unskilled workers more prone to occupational accidents.

There is also much concern among representatives of both workers and employers about the high rate of accidents in Brazil. The employers’ organization for the state of São Paulo compiled data on accidents at work in 1997 and calculated that the cost of time lost through accidents in that year was equivalent to the cost of 24,000 tons of cement. The recent steep increase in the number of deaths on building sites in the state of Rio de Janeiro is attributed to the lack of preventive measures and informal sector subcontracting (ILO 2001a: 36[6]).

In Hong Kong, the Confederation of Trade Unions (HKCTU) reported that in 2001 there were 67,540 industrial accidents and 201 workers killed at work. Although construction workers make up 11 per cent of the workforce, 35 per cent of all industrial accidents occur in the construction industry, with an injury rate of 150 out of every 1,000 workers. According to official statistics, there were 170,812 accidents and 520 fatalities reported in the construction industry from 1991 to 2000. Despite the relatively small construction industry workforce, every year about 16-18 per cent of workers suffer injuries due to industrial accidents – a rate much higher than other developed countries in Asia, such as Japan and South Korea. There are no legal provisions allowing workers to remove themselves from hazardous or dangerous work conditions without risk of dismissal. This severely limits the ability of workers to refuse dangerous work, contributing to a high rate of industrial accidents and diseases (HKCTU 20024).

Housing
It is common practice for contractors to provide housing on site for informal construction workers, particularly when they are migrants from the countryside or from overseas. Living conditions deteriorate as subcontractors offer worse conditions than principal employers.

In China’s rapidly growing cities, where the bulk of the construction workforce consists of labourers from rural areas, the government requires that accommodation and other facilities be made available on site. However, living conditions are sometimes appalling. Huts are dirty and overcrowded, prone to mosquitoes, rats and other pests. They are neither well ventilated in hot weather nor well heated in cold weather. With no proper place to have their meals, workers are often found eating outdoors, exposed to dust in the air, without dining tables or seats. In Malaysia, where an estimated 82 per cent of foreign workers live on the building sites, the poor quality of accommodation (kongsi) was the second major grievance (after social security) of construction workers interviewed for the ILO in 1996. In India the on-site accommodation provided for workers is also rudimentary, comprising simple shacks with no running water or sanitation and poor ventilation. Women fare far worse, with no separate facilities, even though these are required by law (ILO 2001a[6]).

Mechanization
Rapid mechanization and the introduction of new technologies into the construction sector are reducing the employment opportunities for unskilled or low-skilled workers, particularly women. According to SEWA, this has lead to an annual reduction of 1.5 million unskilled workers in construction (SEWA 2011).[13]

Social Protection

In many countries, employers do not pay into social security funds on behalf of construction workers on temporary contracts. Hence, the workers who are most in need receive no social security benefits – no health care, no holiday pay and no protection against loss of pay in periods when they are unable to work due to unemployment, ill health, accidents or old age.

ILO interviews with construction workers in Malaysia in 1996 revealed that the most pressing concerns of both local and foreign workers revolved around issues of social security, occupational safety and living conditions on site. In India, the vast majority of construction workers are not covered by provident fund contributions, although this is mandatory under the law. Other provisions required by law but notable by their absence include: compensation for injuries, medical care, potable drinking water, rest rooms for workers and days off with pay.

Regulation and Deregulation

A key factor for informal workers in the construction industry is the lack of regulation – “the failure to comply with all or some of the regulations in the body of national or local legislation” (Wells 2007: 92[3]). This includes lack of regulation on terms and conditions of employment; licensing of informal enterprises; rules and procedures for the organization of the construction process (appointment of contractors, contracts with suppliers) and regulation over the construction of the buildings themselves (e.g. informal housing and informal settlements).

Outsourcing

Within the industry, 90 per cent of firms have fewer than 10 workers. Workers are recruited through intermediary agents, labour-only subcontractors or directly at pick up points for day labouring.

The construction industry has led the way in the adoption of flexible labour practices since the mid-1970s. Outsourcing of labour through chains of subcontractors and hiring through labour-only subcontractors is now the norm, offering little direct employment. The industry uses large numbers of self-employed workers and informal labour. This has had a profound, negative effect on job security, safety and health and skills training and social security coverage. These labour practices have also weakened trade union organization and undermined collective bargaining in the sector. Outsourcing offers the opportunity to secure significant reductions in costs by passing responsibilities to subcontractors and by avoiding responsibilities for labour legislation, health safety and welfare regulations and social costs (BWI 2006[2]).

According to Jill Wells, former construction sector specialist at the ILO, the practice of outsourcing labour through intermediaries is deeply embedded in many developing countries. The 2001 report prepared for the ILO draws on an extensive literature to document the extent of the practice in India, Nepal, Malaysia, Korea, Philippines, Egypt, Brazil, and Mexico. The same report presents evidence of an increase in the practice in some countries in recent years as workers who had previously been employed directly by the main contractor have been laid off and re-employed through subcontractors.

In South Africa, restructuring in the building industry from the mid-1990s has resulted in a dramatic reduction in the number of workers directly employed by the main contractors and a corresponding increase in the number employed through sub-contractors. A study of construction labor in Cape Town in 2002 found that almost all of the workers on construction sites around the city were employed by subcontractors.

Similar trends can be detected in other countries of sub-Saharan Africa. Studies in both Kenya and Tanzania show that employment in the construction sector has stagnated or declined, while informal sector surveys indicate a large and increasing number of construction workers in enterprises with fewer than 5-10 employees. This apparent shift of employment to very small enterprises is indicative of outsourcing. One of the most interesting developments documented in Kenya is the growth of specialized enterprises offering labour for common tasks such as concreting or block laying (Wells and Jason 2010[5]).

Labour Standards in Public Contracts

Public investment through public contracts represents a high proportion of formal construction activity in both developed and developing countries. The winning tender may well be the one which pays the lowest wages, fails to provide safety equipment or coverage for accidents, and which has the largest proportion of informal workers for whom no tax or social security is paid, and who are not covered in practice by any legal or social protection.

There is a concern that international competition, especially in the presence of multinational companies with large and efficient infrastructures, pushes bidding enterprises to compress labour costs. This often results in reduced wages, longer hours, and poorer conditions such as inadequate sanitation, accommodation and eating facilities. These are made still worse by “modern public authorities’ outsourcing of public and support services via contract, and financial investment in public–private partnerships which provide today the types of public goods and services provided in the past through public contracting” (ILO 2008: 108[14]).

With the worldwide trend towards decentralization, the role of local authorities in promoting local economic development and decent work has become prominent. This is particularly notable in the construction sector, where local authorities can exert considerable influence through procurement or policies to regulate local building practices. Nevertheless, information and knowledge about their potential for promoting decent work in the sector are still poorly understood. Publications on decent work have not acknowledged the potential role of local authorities; instead, they have largely focused on the private sector. In addition, many development and aid agencies have not explored the full potential of such an approach, despite the debate launched by the United Nations Habitat II Conference held in Istanbul in 1996 (ILO 2011[15]).

Denial of Workers’ Rights

The construction industry is notorious for the denial of basic workers’ rights, particularly of Freedom of Association and the Right to Collective Bargaining. Harsh behaviour by employers and contractors in attempting to prevent the organization of trade unions is commonplace. There are numerous examples of construction workers being sacked or victimized for legitimate union activity (BWI 2011[12]).

Securing Workers’ Rights: What Can Be Done

Ensure Government Recognition and Establish Bargaining and Consultation Structures

As with all informal economy workers, government regulation (national and local) – or lack of regulation – affects every aspect of workers’ livelihoods, rights and conditions of work. A fundamental and crucial objective of construction workers’ organizations is therefore to win recognition and representation in government agencies that have jurisdiction over the sector.

SEWA, the biggest union of women workers in the informal economy, has a combined membership of more than 1.8 million members. This includes more than 20,000 construction workers in the city of Ahmedabad, many of whom were former textile workers, retrenched after the introduction of new technologies in the mills.

SEWA started organizing women construction workers in 1996 in Ahmedabad. Workers’ leaders met every month to discuss their problems. The leaders visited all the “Kadianaka” crossroads when the construction workers stood in the mornings in search of work. SEWA conducted a survey of the socio-economic and working conditions of the construction workers. It then led negotiations with the Gujarat State Labour and Employment Department to include the informal workers in new national legislation3 that recognized the rights of construction workers, including access to welfare benefits. As a result, SEWA was included in a state-wide government task force to investigate the issue, leading to the establishment of the Gujarat State Building and other Construction Workers Welfare Board.

Yet the construction workers still were not able to gain access to welfare benefits, as the Welfare Board ruled that a worker has to present a certificate from the employer and contractor that she/he has worked for 90 days in the prior year. This is, of course, virtually impossible in the informal construction industry, especially in Ahmedabad, given the prevalence of day-labouring, lack of contracts, long sub-contracting chains, and high levels of illiteracy among the workers.

SEWA therefore negotiated with the Gujarat state government to accept that a certificate issued by the union itself was sufficient proof of 90 days work to gain access to welfare benefits. Although the proposal was accepted, the detailed arrangements effectively still exclude the workers concerned, and are still under negotiation. Nevertheless, an essential principle was established: that SEWA is recognized as a legitimate representative voice of informal construction workers in Gujarat state, and that there are established channels for bargaining and consultation (SEWA 2011[13]).

Raise or Secure Income
In addition to the obvious need to support increases in earnings for informal construction workers, unions and other associations face a major problem of simple failure of employers, contractors or gang-masters to pay wages at all.

In the first six months of 2002, for example, the Hong Kong Construction Site General Workers' Union dealt with 280 cases of subcontractors failing to pay wages. Twenty-eight per cent of these cases involved 30 or more workers. The union organized a protest rally, demanding the payment of an estimated HK $40 million (US $5.13 million) in wages owed to 3,000 construction workers The union cited the failure of private contractors on public construction projects to pay workers, arguing that stricter regulations to protect workers’ rights are needed. Low bids to win contracts in public construction projects means that subcontractors cut costs and invariably attempt to resolve cash flow problems by withholding workers’ wages. It is also common for subcontractors to seek liquidation as a means of escaping responsibility for paying wages in arrears.

To deal with the problem, the union is calling for stricter government regulations on wage payments, including the stipulation that the main contractor is held directly responsible for paying workers’ wages. The union also demands that the number of tiers in the subcontracting chain is limited so that direct responsibility for employment conditions and wages are more easily ascertained.

The Hong Kong Construction Site General Workers’ Union – established in 1993 through the merger of three smaller, specialized construction unions – has 2,500 dues paying members. The purpose of the merger was to strengthen solidarity among construction workers in different skilled trades and to broaden its membership base as a general union. Strengthening solidarity also meant taking into account the rights of migrant workers. Migrant and immigrant workers joined the union, along with foreign construction workers who were Hong Kong residents. The union now also cooperates with a number of migrant workers' organisations in Hong Kong.

As part of its activities, the union assists workers in lodging complaints with the Labour Department and in negotiations with the main contractor. The union strategy is to target major contractors and parent companies through protest actions and press conferences, where these larger companies are more likely to be concerned about their public image and legal liability. This then exerts pressure on the subcontractors who directly employ construction site workers (HKCTU 20023).

Develop Worker Cooperatives
For many informal own account workers, particularly those in irregular employment (day-labourers, etc.), in the construction industry, there is considerable potential to improve livelihoods through workers’ cooperatives.

In the late 1990s, SEWA formed theRachaita Construction Workers Mahila SEWA Cooperative with 200 members. The objectives were to establish a self-reliant organization that would increase and regularize income, independently bid for and undertake construction contracts directly with the clients, collectively provide capital items (tools and equipment), facilitate and encourage vocational training for its members, and produce and market low-cost construction materials. It has won a number of construction contracts, as a result of which SEWA’s members have been able to access the “mainstream” construction market. They are now learning how to prepare their own business plans, attract investment from banks, and build new business skills which are raising earnings and regularizing their employment.

Provide Safety Training
A key area of construction union activity concerns occupational safety and health (OSH). In Hong Kong for example, the construction union undertakes extensive OSH training, including specialized OSH training for each of the skilled trades.

The union is registered to provide safety training for workers seeking accreditation as a holder of a construction industry safety “Green Card.” Under Hong Kong law, possession of a safety Green Card is compulsory when working on construction sites. In 2000 the union launched its certified safety training course and OSH manual that are now recognized by the Labour Department. The union uses this training not only to attract workers who want to obtain the compulsory Green Card, but also raises awareness of worker and trade union rights. Since it was initiated, an estimated 6,000 workers have participated in the training at the two OSH training centres operated by the union.

1 Building and Wood Workers’ International (BWI) is the global union federation of unions representing workers in the Building, Building Materials, Wood, Forestry and Allied sectors.

2 Jill Wells was formerly a construction specialist at the ILO (where she was responsible for the main report prepared for the 2001 tripartite meeting), and is currently working for the London-based NGO Engineers Against Poverty (www.engineersagainstpoverty.org[16]). WIEGO is very grateful for her advice and support in the preparation of this note.

3 Building and Other Construction Workers (regulations of Conditions Services) Act, 1996; Building and other Construction Workers Welfare Cess Act, 1996.